Interaction with State Programs

Interaction with State Programs Laser Talk

Question:  How can the Energy Innovation and Carbon Dividend Act be reconciled with existing state programs?

Answer:  Section 10 of the Energy Innovation and Carbon Dividend Act states that it will not “preempt or supersede, or be interpreted to preempt or supersede, any State law or regulation.” There are two ways to reconcile the Act with existing state programs such as the Regional Greenhouse Gas Initiative [1] or the California Cap and Trade program [2].

First, stacking, which means the state and federal programs would both continue independently for some period; and second, integration, where the two programs would be merged in some way that is negotiated between the state and federal governments.

As of 2021, all existing state-level carbon pricing programs in the U.S. are emissions trading systems (ETS). There are examples around the world where carbon taxes and emissions trading are both used in the same jurisdiction to complement each other. [3,4] These examples can provide guidance if necessary.

CCL strongly recommends the clarity of a nationally uniform carbon fee, but the existence of existing state or regional ETS programs need not stand in the way of passing national legislation. CCL’s view is that stacking is the most suitable option.

In a Nutshell: The Energy Innovation and Carbon Dividend Act stipulates that it will not preempt of supersede any State law or regulation. CCL’s view is that the most suitable option is for the federal program to be “stacked” on top of any existing State program, such as emissions trading, as long as the State chooses to continue its own program.

  1. “Regional Greenhouse Gas Initiative.” RGGI, Inc.
  2. “California Cap and Trade.” Center for Climate and Energy Solutions.
  3. World Bank, Ecofys and Vivid Economics. State and Trends of Carbon Pricing 2017. Publ. World Bank, Washington, DC. (2017).
  4. “Emissions trading systems and their linking: challenges and opportunities in Asia and the Pacific.” Asian Development Bank (2016).

This page was last updated on 05/05/21 at 22:30 CST.